Bitcoin mining in Iceland is sucking up so much energy that officials are worried they soon won’t have enough power to run the country.
In the last six months, miners have been flocking to the island nation, where abundant and cheap renewable energy and arctic air (to keep servers from overheating) make it a bitcoin miner’s paradise. But the energy-intensive process of mining cryptocurrency threatens to overwhelm the country’s energy infrastructure. If it continues apace, it’ll eat more energy than all of Iceland’s residents would consume before the end of the year.
“Four months ago, I could not have predicted this trend,” Johann Snorri Sigurbergsson, a business development manager at the energy company HS Orka, told the Associated Press. Now he expects the energy demands from cryptocurrency miners will double the country’s energy consumption estimates and end up using more energy than all Icelandic households.
Sigurbergsson told the Washington Post that almost every day for the past six months, he’s received a call from a foreign company looking to set up mining operations in the country. And if they were to accept all the requests, they would run out of energy.
“If all these projects are realized, we won’t have enough energy for it,” Sigurbergsson told the BBC.
But that is not just the only reason they are moving to Iceland.
Evaluation of the country’s regulatory status was ‘outstanding’. The report adds that the selection of Iceland is “fully complementary” with the regulatory and legal requirements of firms operating in the European Union and the United States. Artmotion’s Data Privacy Report (2015) also ranks Iceland as the 3rd best country for data protection and security, out of 170, based on independent data from the United Nations and World Economic Forum (WEF) . In comparison, the same benchmark rated the UK in 23rd place globally, while the US only ranked as the 38th best. The strength and relevance of its information and communication technology (ICT) laws were also rated highly by the WEF. Out of 139 countries, Iceland ranked 9th – compared to much larger rivals such as the US, for example, in 11th place.
Furthermore Iceland, as an EEA member state, has implemented a national data protection framework that meets the requirements of both the existing EU Directive 95/46/EU (the Data Protection Directive), and the upcoming General Data Protection Regulation (GDPR) – due to come into force 25 May, 2018, which will introduce a number of new requirements around data accountability, controls, protection and obligations, both domestically and cross-border.
I think it is also important to note that over and above these requirements, the country has introduced an “Icelandic Modern Media Initiative” (IMMI). This set of thirteen separate pieces of media related legislation aims to specifically protect individuals by completely prohibiting disclosure requests by foreign governments or law enforcement organizations. In addition, the harmonized data protection laws of the EU/EEA mean that the personal data of EU citizens can be transferred to Iceland and secured/processed in the same way as it would be domestically. So firms wishing to transfer data to Iceland from the United States have no limitations in respect of cross border transfers, but they must still comply with the relevant state and federal laws that help to ensure privacy and security of personal data.
The obvious baseline is that if we're using lots of energy for an industrial sector, then some value should be left behind in Iceland. Traditionally this will be wages for workers, taxes, and other investments.
— Smári McCarthy (@smarimc) February 12, 2018
The way bitcoin works, miners, as they’re called, task themselves with verifying bitcoin transactions on a global ledger, where all bitcoin transactions are recorded. In exchange, they’re rewarded in bitcoin. The way the currency is structured, there will eventually be a cap at 21 million bitcoins in circulation, which means there are about 4 million left to mine. The more bitcoins are in circulation, the more computing power it takes to verify the transactions.
As a result, miners are constantly seeking out cheap and reliable energy sources to power their computers. And Iceland has plenty of that. The country’s grid is powered entirely through its abundant sources of renewable energy, a combination of hydroelectric and geothermal power.
But Icelandic politicians aren’t entirely thrilled with the cryptocurrency boom hitting their shores. Smári McCarthy, of Iceland’s Pirate Party, wants to see cryptocurrencies flourish in Iceland but hopes that they’ll be regulated by a similar set of rules that govern the trading of stocks and bonds.
For context, 10MW of energy is peanuts to the Bitcoin network. That's enough to light 2.5 million lightbulbs. The scale factors at play are enormous.
— Smári McCarthy (@smarimc) February 12, 2018
Bitcoin mining is using a ton of energy globally. A single transaction uses the same amount of energy as the average U.S. household in a week, and, as of November, bitcoin was using more energy than about 160 countries. It’s expected to use more power than the entire world does today by 2020.